Frequently Asked Questions in Real Estate

Government Taxes
Philippine Taxes and Other Fees on Real Estate Purchases

A. Buying a property from a developer

The following taxes and fees are added on to the purchase price and is payable by the buyer:
10% Value Added Tax - 10% of the purchase price is added on. This tax is sometimes incorporated to the purchase price already. But it is advised to make sure if it is included in the price or not.
Documentary Stamp Tax - 1.5% of the total selling price
Transfer Fee - 1/2 of 1% of the total selling price
Registration Fee - approximately 1/2 of 1% of the total selling price

B. Buying property from individual owners
Capital Gains Tax (CGT) - 6% of the total selling price. This tax is usually paid by the seller but some owners quote prices net of tax, meaning the CGT is for the buyer's account.
Documentary Stamp Tax - 1.5% of the total selling price. Just like the CGT, this tax is usually for the seller's account, unless otherwise arranged.
Transfer Tax - - 1/2 of 1% of the total selling price
Registration Fee - approximately 1/2 of 1% of the total selling price

Philippine Laws on Foreign Ownership of Land
Foreign nationals would prefer to own lands, especially foreign investors who intend to stay here for a considerable period of time. The law, however, states that foreigners cannot own lands, with only a few exceptions:
a balikbayan (a former natural born filipino citizen) is entitled to own 1,000 square meters of residential land, and one hectare of agricultural or farm land;
in cases of succession; and
in cases of a condominium unit where a foreigner can own up to 40 percent of the capital stock of the condominium corporattion.

A lease agreement can be entered into with Filipino landowners for an initial period of 50 years renewable for another 25 years.

DUAL CITIZENSHIP ACT

What is Republic Act No. 9225?

Republic Act No. 9225 is an Act making the citizenship of Filipinos who acquire foreign citizenship permanent, amend in for the purpose Commonwealth Act No. 63.

RA 9225, which took effect on 17 September 2003, declares that former natural-born Filipino citizens who acquired foreign citizenship through naturalisation are deemed not to have lost their Philippine citizenship under conditions provided in the Act.

There former Filipinos can re-acquire/retain their Philippine citizenship by taking the oath of allegiance to the Republic of the Philippines.

Who is a natural-born Filipino citizens?

Under the Philippine Constitution, a natural-born citizen is a person born of one or both parents who are Filipino citizens at the time of birth.

Does the law RA 9225 apply to dual citizens?

RA 9225 does not apply to dual citizens, ie, those who have both Philippine citizenship as well as foreign citizenship not acquired through naturalisation.

A child born of parents who are both Filipino citizens (at the time of birth) in a country that adheres to the jus soli principle (eg, the United States) is a dual citizen. The child, who is a natural-born Filipino because the Philippines adheres to the jus sanginis principle, is also entitled to apply for a US passport.

Jus soli (right of soil) is the legal principle that a person's nationality at birth is determined by the place of birth (ie, the territory of a given state).

Jus sanguinis (right of blood) is the legal principle that, at birth, an individual acquires the nationality of his/her natural parent/s.
A chld born of one parent who is a Filipino citizen (at the time of birth) and of one foreign parent (eg, Australian) whose country adheres to the jus sanguinis principle is a dual citizen and is entitled to apply for both Philippine and Australian passports.
A child born of one parent who is a Filipino citizen (at the time of birth) and of one foreign parent (eg, Australian) whose country adheres to the jus sanguinis principle in a country that adheres to the jus soli principle (eg, US) would be entitled to apply for Philippine, Australian and US passports.

How do i prove that I am a natural-born Filipino?

A former natural-born citizen, who was born in the Philippines, shall submit the NSO-authenticated copy of his or her birth certificate.

A former natural-born citizen, who was born abroad, shall present a copy of the Report of Birth issued by the Philippine Embassy or Consulate and, in applicable cases, the original copy of the Birth Certificate by competent foreign authorities.

What is the procedure in applying and what documents are required in order to apply?
Applicant shall present a copy of his/her Birth Certificate issued or duly-authenticated by the National Statistics Office (NSO) in Manila

(Note: applicants can request for an authenticated birth certificate from the National Statistics Office on-line through the following website:
www.ecensus.com.ph)

In case of no records found, applicant must present a Certificate of Non-Availability of Birth Record from the NSO and other secondary documentary proof of being a former natural-born Filipino citizen (e.g. old Philippine passport, baptismal certificate, marriage certificate of applicant’s parents)

Applicant accomplishes form entitled “Petition for Dual Citizenship and Issuance of Identification Certificate (IC) pursuant to RA 9225” and attaches three (3) 2”x2” photographs showing the front, left side and right side views of the applicant.
Applicant submits duly-accomplished petition to the Philippine Consulate / Embassy together with the photos, birth certificate and a valid ID.

(Note: applicants who are married and who wish to use their married names must submit a copy of their marriage certificate).

Applicant pays a processing fee of US$ 50.00 and is assigned a schedule for his/her oath of allegiance before a consular officer. Applicant takes his/her oath.
Applicant is given the original copy of his notarized oath of allegiance together with an Order of Approval issued by the Philippine Consulate General.
The Philippine Consulate General forwards to the Bureau of Immigration in Manila the petition, oath, order of approval, and other supporting documents for issuance of an Identification Certificate.

The Bureau of Immigration issues an Identification Certificate (IC) and forwards it to the applicant through the Philippine Consulate General.

What is the implementing agency of RA 9225?

Administrative Order No. 91, Section 1 designates the Bureau of Immigration (BI), in consultation with the Department of Foreign Affairs (DFA), Department of Justice (DOJ), Office of the Civil Registrar-General of the National Statistics Office (NSO), as the implementing agency of RA 9225.

Where do I apply for re-acquisition of Philippine Citizenship if I am in the Philippines?

A former natural-born Filipino citizen who is already in the Philippines and registered in the Bureau of Immigration shall file a petition under oath to the Commissioner of Immigration for the cancellation of the Alien Certicate of Registration (ACR) and issuance of an Identification Certificate (IC) as the case may be, under RA 9225.

A former natural-born citizen who is already in the Philippines but has not registered with the BI within 60 days from date of arrival shall file a petition under oath to the Commissioner of Immigration for the issuance of an IC under RA 9225.

Where do I apply for re-acquisition of Philippine Citizenship if I am overseas?

A former natural-born citizen who is abroad but is a BI-registered alien shall file a petition under oath to the nearest Philippine Embassy or Consulate for evaluation. Thereafter, the Embassy or Consulate shall forward the entire records to the Commissioner of Immigration for the cancellation of the ACR and issuance of an IC under RA 9225.

A former natural-born citizen who is abroad and is not a BI-registered alien shall file a petition under oath to the nearest Philippine Embassy or Consulate for the issuance of an IC under RA 9225.

What is the Oath of Allegiance?

The Oath of Allegiance is the final act that confers Philippine citizenship. It reads as follows:

"I,________________, solemnly swear that I will support and defend the Constitution of the Republic of the Philippines and obey the laws and local orders promulgated by the duly constituted authorities of the Philippines, and I hereby declare that I recognise and accept the supreme authority of the Philippines and will maintain true faith and allegiance thereto, and that I impose this obligation upon myself voluntarily without mental reservation or purpose of evasion."

Can the conferment of Philippine citizenship be revoked?

The conferment of Philippine citizenship under the IRR shall no longer be subject to the affirmation by the Secretary of Justice. However, Philippine citizenship may be revoked by competent authority upon a substantive finding of fraud, misrepresentation or concealment on the part of the applicant.

Can my foreign spouse also become a Filipino citizen under RA 9225?

No, the law does not apply to the foreign spouse. He/she has the following option if he/she wishes to reside permanently in the Philippines: (a) apply for naturalisation; (b) apply for a permanent resident visa.

Can my children (minor or aged 18 years old or over) also acquire Philippine citizenship under RA 9225?

According to Section 4 of RA 9225 (Derivative Citizenship), the unmarried child, whether legitimate, illegitimate or adopted, below eighten (18) years of age, of those who re-acquire Philippine citizenship under this Act shall be deemed citizens of the Philippines.

A married child, although a minor, cannot therefore be included in the petition of his/her parent.

Children 18 years old and over do not qualify to acquire Philippine citizenship under RA 9225. They have the same options that are open to the foreign spouse.

What is the procedure for derivative acquisition of Philippine citizenship?

The petition under oath has the option to list the names and details of any minor, unmarried children. The applicant should include a copy of the Report of Birth and the original copy of Record of Birth for each minor child.

The Embassy will clarify from Bureau of Immigration the exact procedure in case of the minor children and whether the BI will issue to them a Certificate of Identification.

After I have re-acquired Philippine citizenship, can I apply for a Philippine passport?

Yes, and so can the minor children who are deemed to have acquired Philippine citizenship under RA 9225. You would need to comply with the requirements for first-time passport applicants.

What rights and privileges will dual citizens enjoy?

Those who retain or reacquire their Philippine Citizenship under RA 9225 shall enjoy full civil and political rights and be subject to all attendant liabilities and responsibilities under existing laws of the Philippines and the following conditions:

Those intending to exercise their right of suffrage must meet the requirements under Section 1, Article V of the Constitution, Republic Act No. 9189, otherwise known as “The Overseas Absentee Voting Act 0f 2003” and other existing laws.
Under the Act, the right to vote or be elected or appointed to any public office in the Philippines cannot be exercised by, or extended to, those who are candidates for or are occupying any public office in the country of which they are naturalized citizens and/or those who are in active service as commissioned or non-commissioned officers in the armed forces of the country which they are naturalized citizens.

Those seeking elective public office in the Philippines shall meet the qualifications for holding such public office as required by the Constitution and existing laws and, at the time of filing of the certificate of candidacy, make a personal and sworn renunciation of any and all foreign citizenship before any public officer authorized to administer an oath.

Those appointed to any public office shall subscribe and swear to an oath of allegiance to the Republic of the Philippines and its duly constituted authorities prior to their assumption of office: Provided, That they renounce their oath of allegiance to the country where they took that oath;

Can I now acquire land and other properties or engage in business?

As provided for under the 1987 Philippine Constitution, a Filipino citizen is entitled to purchase land and other properties and engage in business. There is no limit in terms of area or size of land or real property he/she could acquire/purchase under his/her name. This right would now apply to former natural-born Filipinos who have re-acquired Philippine citizenship under RA 9225.

Can I now reside in the Philippines without having to apply for entry visa?

Former natural born Filipinos who have re-acquired Philippine citizenship may now reside in the Philippines continuously without having to apply for entry visa. If the foreign spouse and/or child wish to also reside permanently in the Philippines, they may opt to apply for naturalisation as a Filipino citizen or apply for a permanent resident visa.

If he/she does not wish to reside permanent in the Philippines, he/she could visit the country as a Balikbayan (refers to a Filipino citizen who is out of the country continuously for at least one year). The foreign spouse or child may enter the country and stay for up to a year visa-free provided the spouse or child is accompanying or travelling with the Balikbayan when the Balikbayan goes home to the Philippines.

As a dual citizen, how long can I stay in the Philippines?

Having reacquired your citizenship, you can stay in the Philippines for as long as you want without having to pay an immigration fees. You can even choose to retire or permanently settle back in the Philippines. As a Filipino citizen, you are subject to duties and other obligations imposed on other ordinary Filipinos, such as paying the necessary community tax residence and other tax liabilities in accordance with the tax laws of the Philippines.

Will I now be required to pay income tax and other taxes? Am I exempt from paying the travel tax?

In accordance with existing laws, income earned in the Philippines is subject to the payment of tax. Filipinos who re-acquire citizenship and opt to reside and work in the Philippines will pay the income tax due at the end of each fiscal year. They are also subject to other obligations and liabilities, such as the community tax and residence tax.

Countries routinely forge bilateral agreements in order that their respective citizens who earn income overseas do not pay income tax twice.

Filipinos who have re-acquired citizenship, as long as they reside permanently overseas, also enjoy the travel tax exemption extended to Filipino citizens permanently residing in other countries, the OFWs and their dependents.

As a dual citizen, am I allowed to practice my profession in the Philippines (e.g. doctor)?

Under the law, those intending to practice their profession in the Philippines shall apply with the proper authority for a license or permit to engage in such practice.

If I need to get more details on the rules and procedures for the implementation of RA 9225, which government office do I contact in the Philippines?

Under Administrative Order No. 92 Series of 2004 dated 12 January 2004, the Bureau of Immigration has been designated as the government agency in charge of formulating the rules and procedures for the implementation of Republic Act No. 9225. The contact details of Immigration Commissioner Alipio F. Fernandez are as follows: Office of the COmmisioner, Bureau of Immigration, Magallanes Drive, Intramuros, Manila, Philippines. (Tel. No. (63)2 527-3265 / Fax No. (63-2) 527-3279)
For your info:

It refers to act or practice whereby a natural or juridical person, on behalf of another and for or in expectation of a fee, commisssion, compensation or other valuable consideration, performs any of the following acts: list, offer, advertise, solicit, promote, mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease, joint venture or other transactions in real estate or any interest therein.

What is Lis Pendens?

It is an annotation in the title which serves as notice that the property is subject to a pending litigation. It is a legal notice to all the world that there is a dispute as to the title of the same.

What is a Lien?

It is a hold or claim which one person has upon the property of another as security for a debt or charge, judgment, mortgages, taxes.

What is a paraphernal property?

It is a property exclusively owned by the wife.

What is a capital property?

A property belonging exclusively to the husband.

What is an earnest money?

It is a sum of money tendered by a buyer to the seller which, if accepted by the seller, shall form part of the purchase price and becomes proof of the perfection of the contract. It is a sign of good faith on the part of the buyer.

What is a option money?

It is a sum of money tendered by a buyer to the seller which, if accepted by the seller, shall not form part of the selling price.

What is foreclosure?

It is a procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default in payment or terms.

What is a fair market value?

It is the price at which a willing seller will sell and a willing buyer will buy, neither being under abnormal pressure or circumstances.